Tax Implications of Working Abroad as a Freelancer

Working abroad as a freelancer creates unique tax situations. Here's what you need to know.

U.S. Tax Obligations

U.S. citizens and residents must report worldwide income, regardless of where they live or work.

Foreign Earned Income Exclusion (FEIE)

• Exclude up to $126,500 (2025) of foreign earned income
• Must meet either:

- Physical presence test (330 days in 12 months), OR

- Bona fide residence test (tax home in foreign country)

• Only applies to earned income, not investment income

Foreign Tax Credit

• Credit for taxes paid to foreign countries
• Prevents double taxation
• Can carry forward unused credits

Reporting Requirements

Form 2555: Claim foreign earned income exclusion

Form 1116: Claim foreign tax credit

FBAR: If you have foreign accounts over $10,000

Digital Nomad Considerations

• May not qualify for FEIE if constantly moving
• Still must file U.S. tax return
• May owe taxes to multiple countries
• Consider tax treaties between countries

Working with International Clients

• Income from foreign clients is still U.S. taxable income
• May need to handle currency conversion
• Consider tax implications of payment methods

State Tax Considerations

• May still owe state taxes depending on residency
• Some states have different rules for expats
• Check your state's requirements

Planning Strategies

• Time your travel to meet FEIE requirements
• Consider tax-efficient payment structures
• Keep detailed records of travel dates
• Consult with international tax professional

How FileJoy Helps

FileJoy helps you track income from international clients, organize foreign tax documents, and ensures you're reporting everything correctly.

Next Steps

1. Determine if you qualify for FEIE
2. Track all travel dates and locations
3. Keep records of foreign taxes paid
4. Consider professional help for complex situations

Working abroad doesn't mean you escape U.S. taxes, but proper planning can minimize your burden.